Research On The Sequence Of Capital Account Opening

Capital account opening is an important part of China’s economic reform,andit is a prerequisite for the internationalization of the RMB as an international reservecurrency.The progressive sequence of China’s capital account opening is a veryimportant issue.For the order of the current account and capital account, China hasadopted current account before the capital account open mode, while thearrangements for the sequence of each sub-account of the capital account is the focusof this paper, in the short term as well as the long term, China’s capital accountshould be in accordance with the order to open and the prepare.Exchange RateLiberalization,Interest Rate Liberalization and opening financial markets for privatecapital is a prerequisite for capital account opening.I do not agree with the currentargument that the china should accelerate capital account liberalization, there are stillreasons for maintaining part of capital controls, capital account liberalization canonly be gradual and cautious.At present, direct investment in China’s capital account occupies a very largeproportion, how to do for the further opening of the sub-account is another focus ofthis article. At present, for attracting foreign direct investment we are doingsuccessfully,and what needs to be improved is the overseas direct investment. In thisyear,the State Council introduced individual overseas direct investment policy toaccelerate this process, and it is also an attempt to " Resident holding foreignexchange ", in this paper, the feasibility of the policy in China is another focus.The short-term capital flows (hot money) is a more popular topic in recent years.With the fluctuations of the domestic economic situation in recent years, the hotmoney is accused more and more frequently.How much the hot money impacting onthe China’s economy is also a focus of this article.The article is divided into five parts. The first part is introduction, and it describes the background and significance of this study, and the reserch we havedone.The second part is a brief introduction to the related concepts of capital accountliberalization.First, we give the definition of capital account and capital accountopening, and show the conditions and order of the capital accountliberalization.Capital Account Liberalization has risk and return, and we make aprediction of the possible risks.With the introduction of a relatively simpleeconometric model for China’s capital account liberalization and economic growth,positive relationship was calculated.The third part is the international comparison of capital account liberalization.We selected Japan which is very similar to china for the depth study, and we make asummary of capital account liberalization in OECD countries, there are also somereference value.Next we show the details the status of each sub-accountliberalization in China’s capital account, and we give the suggestions.The fourth part is for further study of China’s capital account liberalization. Weproposed future open recommendations for overseas direct investment andshort-term capital flows. This chapter focuses on the feasibility of " Resident holdingforeign exchange ", the impact on China’s economic of the hot money and thereform of the formation mechanism of exchange rate.The fifth part is the concluding part, to collate and summarize for the full paper.